The Euro Crisis and the European Fiscal Pact

Sahra Wagenknecht

The following Bullet is from an important speech by Sahra Wagenknecht [translated by Samuel Putinja], newly elected co-vice president and important theoretician of the German radical party Die Linke, during the June 29, 2012 Bundestag debate on the European Stability Mechanism (ESM) rescue package and the European Fiscal Pact.

At a late hour on Friday 29 June 2012, the Bundestag took two far-reaching decisions. The so-called European Stability Mechanism (ESM), better known as the bailout fund, as well as the Fiscal Pact, a treaty modelled on the socially regressive German “debt brake” law and a blueprint for social service and public sector cutbacks in Europe, were up for vote. 491 Bundestag members voted for the ESM, 111 voted against it, and 6 members abstained. 493 members voted for the Fiscal Pact, 106 voted against it, and 5 abstained. Only the Bundestag members of the Die Linke party voted unanimously against these anti-social legislative packages.

Because the Fiscal Pact is irrevocable and compels governments to implement a harsh policy of savings, these decisions set the course in Europe toward permanent reductions in social spending that will undoubtedly result in cutbacks to public services and the privatization of public property. At the same time, the ESM will make available massive amounts of money to safeguard the interests of banks and the wealthy. In her speech in the plenum Sahra Wagenknecht assailed the federal government for a policy that is driving all of Europe into ruin, and she directly addressed the Chancellor: “You are not saving the euro, but rather you are saving the euros of the millionaires.”

“Billions in taxes have disappeared. The one who bore responsibility was revealed to be a marionette. The part of the puppet master was performed by just that type of manager, who recently promised reform: an investment banker.”

What the Handelsblatt wrote about the nationalization of the energy provider EnBW, unfortunately also applies to the European policies of this government: You are behaving like marionettes. The puppet masters are the bankers, and the result has been treaties in which citizens are short-changed in order to rescue the fortunes of the richest and to keep the financial market casino rolling along. It is telling that the stock markets reacted to yesterday's summit decisions with a display of fireworks.

Speech presented by Sahra Wagenknecht in the Bundestag, 29 June 2012.

[Applause from Die Linke.]

Europe, may I remind, was once supposed to be a project for peace, democracy and social welfare, a lesson from the centuries of brutal war and a conscious alternative to the crude capitalism that brought forth the global economic crisis and the bloody fascist dictatorships.

[Heckling from the FDP: Don't forget the communists!]

“To be true to its heirs, Europe must embody a new humanism as a stronghold of human dignity and social justice.” Richard von Weizsäcker once said this.

[Applause from Die Linke.]

The Europe of today that you now want to set the seal on with the second giant bank rescue package and fiscal pact is the exact opposite of this. This Europe is a project for the destruction of democracy and social justice...

[Applause from the Die Linke.]

A project for the smashing of employee rights and a project for the reduction of wages and pensions. It is a project by Deutsche Bank, Goldman Sachs and Morgan Stanley for the plundering of European taxpayers.

You are all collectively responsible that it could come to this. You, Ms Merkel, and your black-yellow coalition (CDU-CSU/FDP), for whom obviously no other values any longer exist except those traded on the financial markets and appraised by the ratings agencies. But also you, ladies and gentlemen of the purported opposition from the SPD and Greens, who to be sure, gladly play yourselves up in front of the cameras as critics of the government, but who up to now approved almost every European policy outrage of this government, just as you plan to again today.

[Applause from Die Linke.]

“Please tell me not everything I've learned was in vain,” a young woman recently wrote me,...

[Heckling from Johannes Kahrs (SPD): Your speech says it!]

who out of enthusiasm for Europe and the European idea spent a year volunteering in Greece and is now returning to Germany. She is appalled by the Greece-bashing, but above all she fears for a country, in which over half of the people her age have no job and no prospects, in which pregnant women are turned away from delivery wards if they have no cash, in which retirees grow zucchinis on their balconies because their pensions no longer suffice to provide enough to eat. In the middle of Europe! Yes, Greece had serious homemade problems. But the social catastrophe that Greece is suffering through today is not homemade. It is the result of your policies.

[Applause from Die Linke.]

Stop at long last obscuring reality with lies! You tell us we have a public debt crisis. In fact it is the banking crisis which is driving state debt ever higher, because, on the one hand, you deploy rescue packages worth billions and erect giant firewalls, and because, on the other hand, you do not do anything to extinguish the actual source of the fire. This remains the much too extensively deregulated financial sector, which unchanged, with reckless gambling, again and again produces huge losses.

[Applause from Die Linke.]

You tell us the crisis in the Southern countries is due to a lack of competitiveness. Spanish industry today actually produces 30 per cent less than in 2008. However between 2008 and now Spanish unit labour costs declined by 9 per cent. It cannot then be due to this. It is because banks in Spain are ailing and no longer provide the real economy with credit. It is further due to the fact that for years now a brutal programme of cutbacks has been underway in Spain that's taking the breathing air out of the economy. We have already experienced exactly the same thing in Greece.

[Applause from Die Linke.]

Now, with the fiscal pact, this catastrophic programme is to be extended to all of Europe? Do you want to have Greek conditions also in Germany someday? This is madness, Ms Merkel!

[Applause from Die Linke.]

Let's have a look at the numbers. If the fiscal pact is adhered to, in the coming years European states will have to hack over 2000-billion euros out of their budgets, from healthcare, from social services, from education and from pensions. What then will remain of Europe? Mr. Gabriel (SPD), to now claim, that it will be counterbalanced at the EU level by the extra 10-billion euros for the European Investment Bank and the reallocation of some monies: do you not make yourself laughable?

[Applause from Die Linke.]

Whoever wants growth and prosperity in Europe must stop the unspeakable fiscal pact with its dictates for billions in cutbacks. Anyone who doesn't do this is pretending. I say this to you quite clearly.

[Applause from Die Linke.]

There is much to suggest that the planned financial transaction tax will be a sham. Even so, Mr. Schäuble expects revenue of not more than 2-billion euros. Just have a look at what the turnover is on the derivative markets. A proper tax would have to generate considerably more.

Ms. Merkel, I also say to you: If you drive European states further into crisis with brutal programmes of cutbacks instead of finally making them independent from the usury of the financial markets, with direct credit from the European Central Bank, then you will not go into history as the Iron Chancellor, but instead as the grave-digger of the euro.

[Applause from Die Linke.]

You tell us the fiscal pact will be there to reduce debts. Even this is untrue. If you want to contain the explosion of debt then you must finally stop pumping further billions into the financial sector. But you do not intend that, because parallel to this European austerity pact, the Bundestag today will approve the next grave, billions of euros deep, namely the ESM.

You recently approved a supplementary budget in which 8-billion euros were provided to afford the first transfer toward the large new bank rescue package. I wouldn't like to calculate for you how you could improve the living situation and educational opportunities for children from Hartz-IV families with this 8-billion. Take a look at the situation in German councils, cities and towns. Libraries, swimming pools and elementary schools are being closed due to sums that in comparison to this 8-billion are laughably small. Local authorities have been without money for years. For children you have no money. But you obviously have endless billions to rescue the banks. At least stop speaking about saving! You are not at all saving. You are squandering billions.

[Applause from Die Linke.]

You take from one and give to the other. I do not call this saving, but redistribution.

Who actually profits from this redistribution can be seen clearly in Greece. At the start of its supposed rescue, Greece had a debt of 300-billion euros that was held by banks, hedge funds and wealthy private investors. Greece now has a debt of 360-billion euros, 300-billion of which is now the liability of European taxpayers. Incidentally, this example also shows what happened with the alleged aid money. It does not go to Greek pensioners but rather to the European financial mafia.

Spain is now supposed to receive up to 100-billion euros for its banks. Even this money will not stay in Spain. Deutsche Bank itself has 14-billion euros at stake in Spain. It is naturally delighted that the German taxpayer once again obediently transfers it over.

Mr. Brüderle, you just popularly boasted here that Grandma should not be held liable for the investment bankers with her savings account. If you take that seriously, then you and your party must unanimously vote against the ESM,...

[Applause from Die Linke.]

because it represents just what you said, that pensioners, workers and the unemployed must pay for the gambling of the investment banks.

[Heckling from Rainer Brüderle (FDP): Greetings from Erich!]

Whoever exposes taxpayers to such risks – we are talking here about two gigantic rescue packages with a liability for Germany of 300-billion, eventually of 400-billion euros – whoever promotes such risks should turn red-faced when they speak of budget consolidation. Take your own sworn principle of liability seriously for once: He who benefits should also bear the loss. Who benefitted? It is not a coincidence that parallel to state debts, the private fortunes of the richest ten thousand Europeans continuously reach new records. Retrieve the money from there. The billions we are lacking are there. You can get it from there, without the fiscal pact and without the destruction of democracy.

[Applause from Die Linke.]

However, you are doing the opposite. You are socializing the debts precisely so the financial wealth of the rich does not depreciate. To collect the necessary sums the budget sovereignty of states will now be superseded in favour of a Brussels Eurocracy, because naturally, it can cut more ruthlessly. This is the truth of the matter. This is the core of your policies. You are not saving the euro, but rather you are saving the euros of the millionaires.

[Applause from Die Linke.]

At least then be so honest and tell the citizens this. Tell them that the socially conscious federal state, as stipulated by the constitution, finished itself off with the proposed treaties. Tell them that in the future even in Germany they can elect a parliament that will not have much to say, because Germany will also belong to those nations whose state indebtedness will extent beyond what the fiscal pact requires. Tell the people that this is a cold putsch against the constitution.

[Applause from Die Linke.]

Dear colleagues from the CDU and CSU, in the postwar period your parties had the slogan, “Prosperity for Everyone” written on their banners. Now you are destroying the prosperity of millions.

[Heckling from Rainer Brüderle (FDP): Long live socialism!]

You are taking bread from the poor...

[Calls from the CDU/CSU and the FDP: Oh!]

because you are too cowardly to take money from the rich. Do you consider that to be Christian?

[Applause from Die Linke.]

Dear colleagues from the FDP. That a state socializes private losses only when those affected are rich and powerful enough, is anything but liberalism. Do you really want to advocate this?

Dear colleagues from the SPD, you have the words “social” and “democracy” in your party name. You have sinned against this claim often enough in the past years: with Agenda 2010, with the deregulation of financial markets, with Hartz-IV and with the destruction of statutory retirement. If however, one approves these adherence treaties, with which the welfare state and democracy in Europe are finally pushed into the grave, this means equipping the Agenda policies in Germany with a guarantee of perpetuity.

[Applause from Die Linke.]

I must ask you: For this bowl of lentil stew, is it really worth slapping, as it were, your voters one more time in the face, in order to be allowed after the next election once again to join as the junior partner in a grand coalition?